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Another Look at Health Insurance Exchanges

Of all the provisions of the ACA, probably none has received greater attention from health insurers than the exchanges. Though the exchanges are expected to be the conduit for just a small fraction of all the insured at their start in 2014, they will be where most of the growth in health insurance lies. Given the rule that the individual exchanges must be integrated with Medicaid, their role will be critical for any insurer that wants to compete and grow in the individual or Medicaid markets. The dominance of the exchanges for growth in the small group and even the Medicare markets may not be not far behind. It should be no surprise if, eventually, all fully-insured business goes through the exchanges, leaving only self-insured plans outside.

So getting it right matters. Now is the time to think hard about getting it right, before the exchanges are created and inertia sets in. And, as some have argued, getting it right means that we think about the exchanges as places for people to choose their health care, not just their health insurance. So how should we do that?

Here is what we should not do: make it easy to choose care without considering both the quality and the cost of care delivered by the care system. It would be an enormous lost opportunity to improve consumer attitudes towards health care if we built the exchanges to make it easy for people to reason: “I like doctor A. Doctor A accepts insurance products X, Y and Z. Of these three, insurance product X seems to have the lowest cost, so I’ll choose product X.”

If someone is wedded to a particular physician for whatever reason, of course they should be able to do a search of insurance products that include that specific provider in their networks and choose insurance accordingly. However, the search tools in the exchanges should also be designed to prompt participants to learn about quality and how it relates to cost. And that can’t be fully done without including the larger clinical “system” in which the provider plays a part, which involves the care gap and care coordination support provided, and other factors like how much of the cost is paid out of pocket and, perhaps more in the future, the health insurance products that determine how and for what a provider gets paid.

This much is not controversial: If you have a primary care physician, the system of care starts with your physician. But it also includes the specialists to which the physician refers and hospitals to which the physician admits. That could easily turn out to be where your most critical care is delivered. The system could also include whether the Medical Home or Accountable Care Organization in which the physician practices. It would include the quality ratings for that provider, but also, ideally, quality ratings for the network of relations in which that provider practices.

Including all this in a search tool is easier said than done, of course, but since we’re thinking big, those building the exchanges should get clear about what the end goal really should be and start taking steps to get there. If someone first compares different insurance products by price and focuses on the cost and quality of insurance, the fact that we are really seeking access to quality health care can be obscured. But so can it be obscured if we take for granted that a person knows whether “their” providers are actually high performers. If we are going to build search mechanisms into the health insurance exchange that let them choose insurance based on provider, then we should also give people the information to judge when it is in their interest to switch providers. The exchanges should help deepen the patient’s approach to getting care.

The rewards for getting this right will only grow as information technology allows our health records to be shared across providers and systems. Continuity of care is important. Ideally, the physician entering the exam room already knows who you are and knows your history. But the unfortunate reality is that over half of Americans don’t have a primary care provider. Fortunately, it is also true that, as clinical information exchange accelerates, virtual continuity of care will become common. A lifelong medical record will come with the patient to every new physician office and be accessible just as readily to the new physician as to the previous one. Most of us will be seeing interconnected physicians within 5 years. A new physician could have the same or even better analytical tools to identify gaps in care than one’s old physician, with much less muss and fuss needed to figure it out than in the past.

For those managing a serious illness, real continuity of care will still be substantially better than virtual, other things being equal. But other things are not always equal, and for the majority of Americans virtual continuity will be far better than what they currently have, which is no continuity. As Americans grow to understand that, they will look less at individual physicians in isolation, give less weight to including a specific physician in the network, be less likely to assume they know the quality of a physician from how he or she makes them feel in the exam room, or what medical school they went to, and they will look more at interrelated systems of care.

And that brings us back to the idea of buying insurance. For most people, the best approach will continue to have three steps. 1. Filter down the insurance options to find benefit structures and premium levels you can accept. 2. Look for desired locally convenient and high quality providers who are in the networks for those products. 3. Consider the relative quality rating of the health plan on clinical measures and how well the plan serves the needs of its members.

Not all steps are of equal importance, of course. In the near term, the quality of the plan is mostly a product of network management and reflects the average quality of care in the region. But as plans experiment with smaller and more selective networks, improve their care management efforts and reimburse care by its value rather than volume or complexity, plan quality ratings are likely to become more significant.

There will be changes to step 1 as plans have more and better data to share on expected costs of care, but the more profound changes will occur around step 2. The long term goal is that when evaluating a physician one will not simply have access to a number, or some stars by the physician’s name for routine preventive metrics like breast cancer screenings and diabetes control, but information reflecting the physician’s mini-network within a network that impacts the care received.

Again, this is hard stuff, and while the exchanges can include some search tools from the beginning, some of this is years away and will require widespread use of interoperable electronic health records or multipayer claims data sets for the analysis. But the basic principles can be designed in to the exchanges now. Or, we can squander this unique opportunity to help people get a better view of what they want: cheaper, better access to high quality care.

Jonathan Halvorson, PhD, has worked for the past seven years in managed care for a regional non-profit insurer. His views are entirely his own and do not represent those of his employer or other known individuals, living or dead.

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23 replies »

  1. Wouldn’t all this back and forth be almost entirely eliminated if we went with a Universal Health Care system like in all the rest of the industrialized world? A non-profit health system where everyone is entitled to see a doctor is the best system. Taxes might be higher, but the benefits would out weight a small increase in tax. The simplicity of a single-payer system would save billions of dollars and ensure everyone can see a doctor. Early wellness care and early detection of incipient diseases will not only improve the country’s overall health, but lower costs. If we, as a society can get past the propaganda from the for-profit Insurance Industry, we’d all be better off.

  2. According to Medicare regulations Medigap plans should all offer the exact same benefits regardless of cost. In this instance why would one not want to go with the lowest premium?

  3. Hopefully emerging technology that increases inner office communications such as patient tracking software like the electronic whiteboard will help physicians streamline their care process and reduce costs, allowing everyone to enjoy slightly cheaper and better quality healthcare!

  4. It’s interesting to me as a Canadian that personality does not enter into the equation at all. While it is difficult to shop around for the best health care provider this is likely a strong consideration for some part of the population. What if you just don’t like your doctor, in spite of the fact that he or she is in your provider network and is reasonably competent? Where does personal preference play a role in what is undeniably a very critical personal relationship?

    Healthcare cost management.

  5. health insurance reviews out there, but when you have the junk companies thrown out automatically there really isn’t a need for them. The best way to find out which providers are dependable is either through word of mouth if you are lucky enough to know someone that has private coverage, or you can use one of these “sifter sites” as some people call them. Whatever you do make sure that you do your research and find the policy that fits you and your family and you’ll be thanking yourself well into the future for taking your time.

    bluecross blue shield

  6. There are a lot of great websites out there. And 20 years from now they will be the norm. In the mean time some of the biggest cost is comming from those people that aren’t on the web, they are already deprived of information to be better comsumers.

    I haven’t heard of any solutions for these millions. Everything is web web web. Reminds of of the network marketing people or those that resell the products from infomercials that think just putting up a website will result in riches.

    Tonight I am working on a letter to the employees of a client. In it I need to tell them to use generic and give examples and offer other cost saving ideas. All this information is easily available all over the internet, so why aren’t they using it? Becuase majority of people aren’t able or willing to go to the internet and educate themselves. If I write them a letter or call them, they will get the message and usually change their behavior but no website has even begun to get close to impacting even a majority of peopel let alone most.

    We need a consideraly larger solution then the exchanges.

  7. Sorry, Nate, for mixing you up in my head with the first poster, Mike.

    Let me throw in one more example for this discussion: Castlight is a private, for-profit company that has taken on the task of making “shopping” for healthcare as transparent as possible, so that you can tell how much your healthcare is actually going to cost you, and how well-rated are the providers you choose.I think it’s a good example of wrestling with this complex problem. All the information is customized to your plan, and your employer’s situation. Take a look at their website, castlighthealth.org. The CEO told me that “We want to be the Kayak of healthcare. We want the site to be a pleasure to use. We’ll give you a really good seat for a really bad movie.”

  8. “especially now that the new regs on insurance language have come out”

    You mean the suggestions that came out from NAIC that are being shelved becuase they are unworkable. Expect in the next month or two to see this project extended to find a solution to the problems they are having. Feds have come to realize the NAIC sample benefit summary only works for a slim portion of the market so they are back to the drawing board.

    “As Joe Flower responded, some people will struggle, but overall people will be better informed than they were before reform.”

    As an example of this would be how well informed the public was with mortgages and all the disclsoure? Or maybe all the SEC required disclosures that have eliminated stock fraud? How about FDA disclosure that has prevented people from taking unsafe drugs? Poorly designed programs of disclosure actually decrease comprehension by the public.

    Being a perfect product to distribute online ignores my argument that mandating it be only sold online is unfair and counter productive. 5 years ago taxes ideally all would have all been filed online, why not outlaw paper filing and phone filing? Becuase its fundementally unfair to require people to use a system they are incapable of using.

    “The experience of going to the CMS website is nothing like the experience of going to the DMV.”

    Not sure if it is on purpose or unintentional but your ignoring what I said. What about those without a computer that instead of going to the CMS website have to call CMS? Something I use to have the pleasure of doing quit often, luckily I don’t have to nearly as much. It was far from pleasurable or efficient.

  9. Yes, certainly the exchanges should look to successful models in other industries. Kayak and other travel sites, Zappos, Amazon, Trulia and other real estate sites, etc. Also there are good bits on insurer’s sites, and of course you’d be foolish not to look at ehealthinsurance for ideas.

  10. I should also make something explicit: not everything has to be on the exchange itself. Sometimes a link will do.

    Also, some information is important and the exchange could educate about it, but the information may not belong there. For example, one piece of information that health plans have the best access to of all is cost. If you want to know what you can expect it to cost to see Dr. X on an annual basis if you have, say, COPD, a health plan could pull data from claims, run it against the benefits, and give a more accurate number for that plan than any other source. Does that information belong on the exchange? I doubt it, but the exchange could help people know if this information exists and where to find it once they become a member.

  11. Roger, I agree that we need to walk before we run, and I certainly wouldn’t want to jeopardize the launch of the exchanges waiting for data that doesn’t exist. In the short term, NCQA data is a good start, but not just HEDIS scores. We can also easily provide data on whether a provider is certified as a PCMH, or for Diabetes care. Perhaps Meaningful Use certification could be provided. We could probably also provide a link to hospitals that the physician admits to and their quality…maybe not out of the gate, but by 2015. You’d have to explore the details about what makes sense from a UI and data availability perspective.

    1. Agreed that you need to keep the most critical information up front to keep things simple, and there need to be easy to use filters to weed out the differences.

    2. There are major data challenges, completely agree. But as you know, thinking about how to present quality information can go on in parallel with working out the data challenges with interfacing with Medicaid/SCHIP, etc. There will be different work groups, with largely different personnel. Once you know what you want to put on the website and how to get the data, actually designing the site is not a huge lift.

  12. Nate, I don’t have the time or inclination to deal with all the misconceptions that are coming from an inflexible place.

    I do have a few general points for those who suspect there are large holes in Nate’s “argument” but had trouble or didn’t bother to formulate them.

    1. Literacy is an issue but there is a lot of research now on how to design websites and present complex information in an effective way. The insurance industry and government are both now quite aware of this. Most states will design fairly sophisticated user interfaces and use relatively simple, standardized language (especially now that the new regs on insurance language have come out). As Joe Flower responded, some people will struggle, but overall people will be better informed than they were before reform.

    2. Yes, individual insurance is inefficient to sell through an agent/broker….that’s why it is a perfect product to sell online.

    3. Government is not going to staff the exchanges, as a rule (maybe by law?). There are going to be non-profit entities, not unlike HealthPass in New York, managing the exchange on a day to day basis. And even if government employees did staff it, we’re talking about a web site. The experience of going to the CMS website is nothing like the experience of going to the DMV. Lots of convenient information at your fingertips, no surly clerks!

    4. Assuming political/judicial forces don’t block the ACA (possible but unlikely), I expect the exchanges to survive and thrive. This is something that is overdue in the marketplace. Once used to it, people will want to get their insurance this way, I suspect. But you have your predictions and I have mine, and we shall soon see how much wisdom lies in the statement “exchanges won’t last more than a couple year.”

  13. Highly unlikely that it will cease to exist. Somewhat likely that the penalties in the individual mandate will be removed, which will trigger a replacement (Republicans are against industry here, not with it). But the subsidies and the rest will remain, including Medicaid expansion and the exchanges. So as I said: now is the time to get it right.

  14. It’s going to be enough of a challenge for states and HHS to get exchanges in place by the deadline without adding an enormous and questionable web of quality data.

    Why not just add NCQA or other ratings to the Massachusetts Connector model? (Yes, I know NCQA does not rate all plans, but this might cause the number to increase.) It’s not a perfect answer, but it is at least a practicable one.

    The big exchange problems are going to be:

    1. Making decision-making straightforward for enrollees, especially those who may be Medicaid or SCHIP or ACA-subsidy eligible, and who must provide income and other data on top of everything else. Making matters worse, already insurers are arguing that exchanges should include every possible plan offered, something that in larger metropolitan areas could result in literally scores of almost-but-not-quite-identical plan listings.

    2. Building interfaces with state Medicaid and SCHIP systems and with the so-called federal hub — including complying with the “no wrong door” standard. (This is what is likely to cause even those states willing to develop their own exchanges to miss the deadline.)

    Jonathan’s proposal of trying to interface with a vast quality data base is just going to make these problems even more difficult to surmount.

  15. the consiquences of the exchanges are sever enough that groups and people have to prepare until they are 100% certain they wont exist. In insurance decisions can take 12-18 months to make. For example if a group wants to be self funded in 2014 they need to start preparing now

  16. If I shortened my long and hard to spell name to initials could you maybe get it right then?

    “such as that most poor people cannot use the Internet”

    Where was this said Joe? And why do you feel it necessary to lie to make your point? I did say;

    “so poor using it they can’t complete a two minute application”

    No reference was made to anyone’s financial being in life, it clearly, I thought, referenced computer skills or lack there of. Those people, in my experience, are rich, poor, young and old.

    Seeing how bad you messed up my name and your confusion with words that have duel meaning maybe its not my argument that has problems?

    Finally you seem to fail to admit the difference between trying something new and mandating it. There is nothing wrong with making options available for people to try. That is not the case here. If you want the subsidy and tax advantages you have to use the exhange. So those people that are not able to use it are discriminated against, are you for discriminating against poor people Joe?

    We know 100% of people will not be able to use the exhange, why do we design a system that requires 100% participation? Seems it was a half ass solution to a complex problem, something we should never try. There are plenty of private and existing models that take into account the different limitations of the public that could have been improved on to accomplish the same goals. Some people are fans of half ass, not very well thought out solutions, personally I am not.

  17. Jon, your central observation, that the exchanges should revolve around not just picking healthcare insurance, but around picking healthcare, by both quality and price, is exactly right. The exchanges must help people make good choices — or there is one less engine to drive positive change in healthcare.

    As for whether a web site can be built that brings such complex information out and facilitates choices by people who are not necessarily all that well-informed about their options and the implications, I think it can be done. It requires some serious simplifying of the choices, and some serious interface design — not easy. But I believe it can be done. We could start by looking at some existing sites that facilitate multi-factorial decision-making, such as Kayak, the travel site. We could look at some of the existing health insurance sites — I believe Kaiser’s and CIGNA’s are better than most. And we could pull in emerging organizations that are making it their business to make healthcare and health insurance more transparent, like Castlight.

    Mike, your bumptious and rebarbative screed, when stripped of its weird correlations (“public not for profits” somehow morph into ACORN and the Tea Party) and blatant, blind assumptions (such as that all government agencies are corrupt and inefficient and for-profit corporations are not) and assertions (such as that most poor people cannot use the Internet) and boiled down to its bones, amounts to a whine: “This is hard! It might be done wrong!” This is an argument? For what? Any solution to healthcare is difficult, because the issues and the mechanics are ineluctably complex. This is an argument not to try? Anything won’t work if it is done badly — this is an argument not to attempt it? If we are to take such an argument seriously, we would find ourselves not ever attempting anything ever period.

  18. “For-profits might work as well, but you would have to deal with the inevitable attempts to influence how information is presented on the exchanges to favor particular industry players against the public interest.”

    With Public exchanges who deals with the attempts to influence how information is presented? One thing government is known for is graft and corruption, it doesn’t take much to buy off a public official or low level bureaucrat.

    Do we really want ACORN out their enrolling people? Most readers on this blog probably would but imagine if it was Tea Party or Heritage, would you want them running the exchanges, would you trust where they “pushed” people? Knowing a for profit company is running them and what their bias are is far safer then thinking we have an unbiased public exchange with hidden motives.

    i.e. look at the bombshells the FBI is releasing about Murtha now that he can’t be tried and sent to prison. We have to wonder if there was a single bill or appropriation he supported that wasn’t influenced by corruption.

    Public exchange in no way means they match public interest.

    All that being said the exchanges are going to be a complete failure anyways. The problem is this bill was written by not very smart people who have never worked a day in the industry and conceived by equally not smart academics who have never worked a day in the industry.

    All these comparison tools and centralized data sets are great, exactly how many pages is this book going to be? How many forest are going to die in publishing this data? Foolishly most people assume this will be a website, that’s going to exclude 20-40% of the purchasing market. The industry today can’t even get the majority of the market to complete applications online. If someone doesn’t have a computer, or is so poor using it they can’t complete a two minute application how do you expect they will look through all this information and make a decision then enroll online? Already their employer does 90% of the work for them and they can’t/won’t do the remaining 10%. When you remove the employer who is going to do the other 90%?

    Individual Insurance is highly inefficient to sell and distribute unless people buy online without an agent. Agents can’t make enough from most carriers to sell individual policies. You need to be very efficient to not lose your shirt. We are cutting agent commissions so they won’t be the solution. Employers are removed from the picture. Government agency? Do we really want to model the DMV, Social Security Administration, Welfare, Medicaid office for enrollment in the exchanges?

    Let’s look at the current Medicaid system, over 10% fraud in enrollment, such a terrible process that 25%+ of the uninsured are eligible for Medicaid but choose not to enroll. Medicaid enrollment is the anti-everything we are trying to accomplish.

    Exchanges won’t last more than a couple year, they are such a poorly planned idea they will implode before they reach any meaningful mass. And that’s just the enrollment process, once the guarantee issue debacle sets in the price is going to make people yearn for the old days before government tried, and failed, once again to fix healthcare.

  19. Glad to see that this idea is being considered. I agreee that sometimes choosing the lowest cost insurance plan may not be in the best interests of the beneficiary, but it always wise to comparison shop. I have seen many individuals that have purchased inferior coverage for an exobitant price, only because they found it too difficult to do the research that was required in order to make an informed decision. Insurance policies can be very complicated contracts, with many exclusions and limitations as it is. It is not likely that the general population will start reading all of the documents available in the clinical information exchange.

  20. Mike, I have no objection to the exchanges being run by non-government entities, preferably non-profits that have a wide representation on their governing boards. For-profits might work as well, but you would have to deal with the inevitable attempts to influence how information is presented on the exchanges to favor particular industry players against the public interest.

  21. Mike, one difference with the public exchanges is that there are provisions of PPACA to help the underserved who might not find the private exchanges navigable.

  22. I’m stil not completely sure why these exchanges are so important and why they have to be government owned. There are arlready private companies that provide the services you mentioned, the ability to sort quotes and search for plans with certain doctors. They’ve been around for years. I understand the need for regulations insurers need to meet, but this building of exchanges is an odd business for the government to get into.

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